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Condo investment in Toronto tenders diminishing returns, but the discerning real estate investor can still turn a tidy profit.

The supply of Two-Plus- Two units (two bedrooms and two bathrooms) is very low in downtown Toronto real estate . This situation is a great plus point for an investor who is looking to sell the unit in the near or distant future. The benefit of scarcity of two -plus-two units to the investor is lesser competition in the marker while selling and hence better re-sale value!

Besides low supply of two-plus-two units there is a great demand for such units in  downtown Toronto real estate .A perfect equation for profit!  For instance, down sizers prefer the two-plus-two because, while significantly smaller than the house they sold, it’s still large enough to host their visiting children. Young professionals,also prefer two-plus-two’s. “You have extra room for a nursery and extra washroom for guests,” said Manu Singh, a veteran investor and broker with Right At Home Realty. According to Singh, young  professionals are one of the best clients for renting out two-plus-two’s as high rents of Toronto  and owning a place might be too expensive for them. Further, urban  professionals  in downtown core most often like to share two-plus-two’s  as roommates . This offers an extra  benefit to the investor who can raise the rent as it is shared between two individuals/income earners.

According to  Singh,  approximately 70% of units in new builds are smaller than two-plus-twos,  which means, they teem with value. “There’s more value to a two-plus-two, or even three-bedroom unit, because when they flip it for a profit they’ll have less competition and less supply that can dilute the sales price because buyers won’t have as much choice.”

Toronto’s condo units are getting smaller by the build, so Singh recommends anything over 1,000 square feet.

“From an investor point of view, you want to focus on getting a larger two-plus-two in terms of square footage,” he said. “If you can get greater than 1,000 square feet, it’s a great investment because, again, newer developments are becoming smaller and smaller for the specs. In general, two-plus-twos rent higher and they sell better for those reasons. It’s great for investors.”